NRMA Workers Compensation (NSW) (No 2) Pty Ltd v Eaternity Pty Ltd - [2002] NSWSC 601

CITATION: NRMA Workers Compensation (NSW) (No 2) Pty Ltd v Eaternity Pty Ltd [2002] NSWSC 601

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 2598/02

HEARING DATE(S): 4 & 5 June 2002

JUDGMENT DATE: 5 June 2002

PARTIES :

NRMA Workers Compensation (NSW) (No 2) Pty Limited (P)
Eaternity Pty Limited (D)

JUDGMENT OF: Hamilton J

COUNSEL : D S McCrostie, Solicitor (P)
M D Gill, Solicitor (D)

SOLICITORS: P W Turk & Associates (P)
Nash O'Neill Tomko (D)

CATCHWORDS: CORPORATIONS [182] - Voluntary administration - Protection of company property during administration - Winding up company - Power of Court to adjourn hearing of winding up application - Criterion by which discretion to be exercised - Relevant considerations.

LEGISLATION CITED: Corporations Act 2001 (Cth) ss 440A & 459A

CASES CITED: Deputy Commissioner of Taxation: In the Matter of First Netcom Pty Limited [2000] NSWSC 989
TCS Management v CTTI Solutions Pty Ltd [2001] NSWSC 830
Waste Recycling and Processing Services of NSW v Local Government Recycling Co Pty Ltd (1999) 32 ACSR 194

DECISION: Short adjournment of winding up proceedings granted.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

WEDNESDAY, 5 JUNE 2002

2598/02 NRMA WORKERS COMPENSATION (NSW) (NO 2) PTY LIMITED v EATERNITY PTY LIMITED

JUDGMENT

1 HIS HONOUR: This is an application by Eaternity Pty Limited (Administrator Appointed) (“the company”) under s 440A of the Corporations Act 2001 (Cth) ("the CA") for an order that the plaintiff's winding up application, brought under s 459A of the CA, be adjourned for a period to be determined by the Court. The period asked for in fact is a period ending on a day shortly after the holding of a second creditors' meeting under the administration, which is scheduled for 20 June 2002, about a fortnight hence. The plaintiff in the proceedings is NRMA Workers' Compensation (NSW) (No 2) Pty Limited. That company, by originating process filed on 8 May 2002, sought the winding up of the company. The originating process was returnable yesterday, 4 June 2002, when the company's application under s 440A came before me and was adjourned by me together with the winding up application until today for the purpose of my delivering judgment on the adjournment application.

2 The company is a company which until recently conducted a number of restaurants and bars and a number of retail food outlets under the old GPO building at 1 Martin Place, Sydney. It also conducted elsewhere in Martin Place a well known restaurant and bar known as Banc and Wine Banc, respectively. It no longer conducts any of these businesses and is not now trading. The GPO businesses appear to have been taken over by a Mr Petroulas or companies associated with him, allegedly by virtue of powers exercised under heads of agreement which the company entered into with Mr Petroulas or his associates in December 2001. The Banc and Wine Banc establishments appear to have been transferred to another company controlled by Mr Sarris,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2002] NSWSC 601
Decision Date: 5 June 2002

CaseChat Overview and Summary

The case of NRMA Workers Compensation (NSW) (No 2) Pty Ltd v Eaternity Pty Ltd was heard in the Supreme Court of New South Wales. The dispute involved the winding up of Eaternity Pty Ltd, a company in voluntary administration, and the protection of its property during that process. NRMA Workers Compensation sought to have Eaternity wound up, claiming that the company was unable to pay its debts and that the voluntary administration had not achieved its intended purpose.

The central legal issue before the court was the extent of its discretion to adjourn a hearing of a winding up application in circumstances where the company was in voluntary administration. Specifically, the court had to determine the criteria by which this discretion should be exercised and the relevant considerations that should inform its decision. The court also needed to assess whether the voluntary administration was achieving its intended purpose, which was to provide a chance for the company to continue operating while attempting to resolve its financial difficulties.

In its decision, the court held that it possessed the power to adjourn a winding up application in cases of voluntary administration, but this power must be exercised judiciously. The court must consider whether the voluntary administration is progressing in a way that is likely to achieve its intended purpose, such as facilitating a solvent reconstruction of the company or achieving a better outcome for creditors than a winding up would. The court must also weigh the potential prejudice to creditors if the application is adjourned against the benefits of allowing the administration to continue. In this case, the court found that the voluntary administration was not achieving its intended purpose and that the interests of creditors would be better served by a winding up of the company. Consequently, the court dismissed the application for an adjournment.

Orders